MBA Programme

Postgraduate Institute of Agriculture

University of Peradeniya

Organizational Behavior and Analysis: BM 5101

Management Report

Final Exam – Part I

Name: Sachini Sandeepani Jayasha Gedarawatta

Registration Number: 20218

Date of submission: 18.09.2021

Student Declaration

This is to certify that in the following submission...

i. …it is my work alone and has not been plagiarized

ii. …when ideas have been burrowed the source has been clearly credited.\

I am aware that if evidence to the contrary is found I may receive a failing

grade.

……………………………………………………………..

Signature

Date: 18.09.2021

Hayleys Management Philosophy

As shown in Figure 1, Hayleys PLC did not change or alter their vision or mission statements due to the pandemic. Nor did they

compromise on their core values. This figure clearly depicts their unchanging philosophies on the matter with a side-by-side

comparison of the views stated in their annual reports on both the 2019/ 2020 and 2020/ 2021 releases. On having read both their

annual reports published during the pandemic (i.e. 2019/2020 & 2020/2021 issues), it is evident that Hayleys is extremely

adaptive and resilient towards sudden or unexpected changes. This could perhaps be a result of their 143 years of experience in

running a company that underwent multiple mergers and acquisitions that gave rise to one of the most diverse portfolios a

company could have in Sri Lanka.

According to Henri Fayol, there are 14 management philosophies (see Figure 2 for definitions). And it is evident through Hayleys

vision, mission and value statements (VMV) (see Figure 1) that they have stayed true to most of these (Fayol H., 1949, P.20,21).

Albeit we cannot judge some of these factors without proper internal staff’s input, the information in Figure 1 corroborates that

Hayleys clearly demonstrates these aspects of the 14 management philosophies through their VMV statements : ‘division of

work, authority, discipline, scalar chain, unity of command and unity of direction’. This is because of their priorities being given

to teamwork, accountability and performance which is a direct result of the philosophies chosen above. Without having proper,

equal and fair division of work, the manager cannot get his employees to respect teamwork or abide by it as accomplish such

large project as Hayleys does. Without good understanding of their objectives or stern discipline/ work-ethic, one cannot respect

authority and follow. Nor would they take accountability seriously. Subordinates tend to lead by example; thus, it is important

for managers to abide by, in the least, some of the 14 management philosophies in order to achieve their vision.

Figure 1: Comparison of vision, mission and value statements in the Annual Reports of 2019/2020

and 2020/2021

Figure 2: Henri Fayol's 14 Management

Philosophies with definitions

Ethical and Social Responsibility Standpoint

Hayleys’ ethical and social responsibility is clearly depicted in their VMV statement as shown in Figure 1. According to Daft’s

book on Management, “corporate social responsibility (CSR) refers to the obligation of organizational managers to make choices

and take actions that will enhance the welfare and interests of society, as well as the organization” and ethics is the “code of

moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong” (Daft, R.

2016. P.152,162). And Hayleys does this in several ways. Their CSR is divided into 3 main sections that are namely

Environmental, Social and Governance which is specially noted in a dedicated part in their official website. These sections are

further divided into 4 subsections each as depicted in Table 1. Even in the past, Hayleys has been deemed to be one of the few

companies showcasing organizational virtuousness. Organizational virtuousness is when “an organization pursues a positive

human impact, moral goodness, and unconditional society betterment for its own sake”. This is considered a discretionary

responsibility which means that it is “purely voluntary and is guided by a company’s desire to make social contributions not

mandated by economics, law, or ethics” (Daft, R. 2016. P.168). For example, they provide all employees free meals,

transportation, medical care/ allowances and many other added benefits. Amongst these are also gifts on special occasions such

as birthdays and care packages with dry rations or medicinal packages during trying times such as the Covid-19 pandemic.

Table 1: Hayleys Sustainability and Environmental, Social, Governance (ESG) Framework

Environmental Social Governance

Energy & Emissions Work force & Diversity Structure & Oversight

Water utilisation Health, Safety & Well-being Codes & Values

Waste & Chemicals Supplier & Customer relationships Transparency & Accurate reporting

Primary resource utilisation Community relationship Organisation risk management

As their main aspiration is to be the leading corporate inspiration in Sri

Lanka, they regard transparency highly and dedicate a large portion of

their annual report to sustainability and governance which are topics

directly reported by their chairman and CEO. This also reflects on the

stance ethical leadership plays ” (Daft, R. 2016. P.169). in their

organizational culture where their vision is led by example. Ethical

leadership means that “managers are honest and trustworthy, fair in their

dealings with employees and customers, and behave ethically in both

their personal and professional livesIt is clear that this is very important

to them as “Honesty and Integrity- ethical and transparent in all our

dealing” is the very first value listed in their annual value statement

(Figure 1) which is also a part of the definition of an ethical leader (see

Figure 2). When reading Hayleys’ annual report and website, some of

their major, large scale events such as their 6 hydropower plants (first in

Radella), wind power plant in Kalpitiya and solar powerplant in

Welikanda (Jayasekera, W. & De Zilva, R. 2021). These are extremely

huge, capital-heavy projects that they’ve consciously invested in to

diversify their portfolio.

There are several ways in which outsiders, such as us, may judge a

corporation’s level of ethical and social responsibility without actually doing

an audit. Figure 3 illustrates this evaluation criteria by sectioning the different

areas in CSR which are: discretionary responsibility, ethical responsibility,

legal responsibility and economic responsibility. The pandemic posed the

biggest risk to this framework. However, Hayleys was quick to do a thorough

risk assessment on all these sectors and take both mitigative and precautionary

measures to prevent them as mentioned in their annual report (P. 85-95). For

example, when one sector took a hard-economical hit, they opened applications

to all employees in

another acquired

company. Similarly, they

verbatim did “aggressive

Figure 2: Characteristics of an Ethical Manager/ Leader

Figure 3: Criteria of Corporate Social Performance and

Framework for evaluating Corporate Social

Responsibility

client acquisition in export markets, increased focus on strengthening presence in export markets and diversification of export

markets all at the same time to keep the demand coming. All this while also continuing to do “PCR testing with over 13,000 PCR

tests done in financial year 2020/21” (Hayleys PLC Annual Report, 2020/2021, P.90). These actions actively prevented their

employees from being victims of the world economic crisis risen due to the pandemic. Their continuous care and communication

of ethical standards towards their staff also engraved an unwavering trust in them that is sure to reap fruit post-pandemic as they

will be able to retain highly qualified employees even in an open job market.

On analyzing Hayleys’ actions during the pandemic, it is evident that they are an extremely principled-based organization in

their code of ethics which, in other words, means they are at the “post-conventional” moral development stage according to Daft.

This means that they work from an internalized set of values and principles where principle-based statements are common and

that they are “designed to affect corporate culture; they define fundamental values and contain general language about company

responsibilities, quality of products, and treatment of employees”. Post-conventional means that Hayleys is “guided by an internal

set of values based on universal principles of justice and will even disobey rules or laws that violate these principles. Internal

values become more important than the expectations of significant others”. Part of this includes promotion of acts such as

whistleblowing where employees are prompted to disclose of illegal, unethical, or illegitimate practices on the employer’s part

which Hayleys has listed as a mitigating activity to legal risks in their annual report: “establishment of whistle blowing policies

and grievance mechanisms for all employees of the group”. (Daft, R. 2016. P.160,170, 172; Hayleys PLC Annual Report,

2020/2021, P. 94).

Therefore, based on all the above observations, it is evident that Hayleys has a combination of a

utilitarian and practical approach. Utilitarian approach refers to ethical decision making where the

ethical choice is the one that produces the greatest good for the greatest number of people while

the practical approach means to sidestep debates about what is right, good, or just, and bases

decisions on prevailing standards of the profession and the larger society, taking the interests of

all stakeholders into account (Daft, R. 2016. P.159). Though these two approaches might seem

entirely different to each other as one focuses more on employees while the other on stakeholders,

Hayleys tends to create a great balance of the two. This balance is what kept them afloat during

the pandemic economic crisis. They made employees work on shifts or work from home which

might’ve disrupted their work routine for the greater good of all those employees who had to

come to work by reducing the people they encounter; most meetings were reduced to virtual ones.

Even so, they didn’t forget to think of their stakeholders and take practical decisions. Hayleys

earned a 660 mn rupees which equivalent to 115% profit after tax of which 12% went to

stakeholders as ROE (Return of Investments) which was way more than the previous year even

during the pandemic (see Figure 4). (Hayleys PLC Annual Report, 2020/2021, P. 90, 102)

Finally, we can see through analysis that Hayleys regards ethical and social responsibility in the

highest and actively participates in any chance they get to be an inspiration to other organizations,

not just within Sri Lanka, but also globally.

Figure 4: HAYLEYS PLC

Annual Report 2020/2021-

Stakeholder Value Creation

Corporate culture in sustaining business relationships with the global environment

Corporate culture refers to the culture which “is created, acquired and/or learned, developed, and passed on by a group of people,

consciously or unconsciously, to subsequent generations. It includes everything that a group thinks, says, does, and makes—its

customs, ideas, morals, habits, traditions, language, and shared systems of attitudes and feelings—that help to create standards

for people to coexist” (Rijamampianina, R. & Carmichael, T., 2005, P.95). This culture is affected by organizational environment

which consists “of both task and general environments, includes all elements existing outside the boundary of the organization

that have the potential to affect the organization” (Daft, R. 2016. P.79). There are 2 main parts of this environment: Internal and

External. The “internal environment includes elements within the organization’s boundaries, such as employees, management,

and corporate culture” while the external refers to everything outside that such as global economy, customers and markets. Like

in any organization, even in Hayleys there are visible and invisible aspects of viewing organizational culture as shown in Figure

5. Though we won’t be looking at all parts, we will focus on a few aspects of the visible and invisible aspects of the culture and

internal environment of Hayleys that helps it sustain business relationships with the global environment as shown in their annual

reports. The breakdown of any organization’s internal environment is illustrated in Figure 6 below.

Figure 5: Levels of Corporate Culture by Daft,Richard L. (2016). P.90.

Hayleys marks its global presence through major acquisitions and joint ventures (Daft, R. 2016. P.88). In the past they have done

huge joint ventures with a German company called Martin Bauer Group to introduce a global tea beverage. Similarly, they

worked on multiple acquisitions during the pandemic as well. Their annual report mentions the acquisition of South Asia Textiles

Ltd., for Rs.3.9 bn in April of 2021 as an indication of their future plans for the textile sector which has remained resilient in an

extremely challenging year (i.e. referring to the pandemic). They have also quoted the following “Unisyst Engineering PLC

management was assigned to this sector. International Operations performed well with Maldives operation recording a

noteworthy performance and Myanmar, Indonesia, India and Bangladesh all turning around, through acquisition of new

businesses and focused growth with existing clients”. With this information, we can deduce that even under stressful situations

such as the pandemic, Hayleys does not follow a consistency culture (refer to Table 2 below for definitions and Figure 7). They

never did and doesn’t seem to ever desire the need for

a stable environment. Their employees seem trained,

and versatile in fast-paced environments that are

constantly changing so facing a high-risk, high

economic-casualty situation wouldn’t have been as

difficult for Hayleys as it was for other corporations.

Hayleys typically tries to acquire multiple small

entrepreneurial companies that are controlled through a

centralized system from within their Group. Such joint

ventures and acquisitions not only globalize their

portfolio but also keeps all the employees on their toes.

Though previously (i.e. before the pandemic), Hayleys

PLC was achievement driven, they have moved to a

mix of adaptability and involvement culture. According

to Daft, adaptability “emerges in an environment that

requires fast response and high-risk decision making”

whereas involvement refers to the “internal focus on the

participation of employees to adapt rapidly to changing

needs from the environment” which are both requirements in order to successfully face this pandemic (Daft, R. 2016. P.95,96).

Therefore, it is clear that they have done this successfully through their annual profit listings.

Figure 6: Breakdown of any organization’s internal and external

environments

Figure 7: The 4 types of Organizational Cultures extracted from Daft, Richard

L., 2016, P.94.

Table 2: Definitions of the 4 types of Cultures as in Daft, Richard L., 2016, P. 96

Adaptability culture The adaptability culture is characterized by values that

support the company’s ability to interpret and translate

signals from the environment into new behavior responses.

Achievement culture An achievement culture is a results-oriented culture

that values competitiveness, personal initiative, and

achievement.

Involvement culture A culture that places high value on meeting the needs

of employees and values cooperation and equality is an

involvement culture.

Consistency culture A consistency culture values and rewards a methodical,

rational, orderly way of doing things.

They have not only sustained business, it’s relationships nationally, but

also globally with these acquisitions. They have definitely set a

precedent and let their competitors know of their presence even during

a global pandemic/ global economic dilemma. Hayleys and this

culturally “generative and global mindset”, that they have cultivated

over a period of 143 years since it started, sets them apart from other

multinational companies. One of the main ways to withstand the

pressures resulting from the pandemic was to focus on building the

halted supply chain and logistics work. Therefore, a new vision and

expansion of their global mindset was a requirement. Figure 8

highlights the three dimensions of this mindset (meaning “the ability to

appreciate and influence individuals, groups, organizations, and

systems that represent different social, cultural, political, institutional,

intellectual, and psychological characteristics” according to Daft,

Richard L. [P.116]). While “globalization refers to the extent to which

trade and investments, information, ideas, and political cooperation flow between countries” it is essential to understand the

impacts of it on a company’s finances when done during a crisis situation. However, Hayleys’ strategic decisions have managed

to gain a profit despite that due to the good management of their “international environment” and related aspects as shown in

Figure 9. Their recent acquisitions, as mentioned earlier, proved just that. However, despite their global goals, they have not

forgotten their social dimensions (sociocultural values) that constantly keep them in the limelight internationally. Their “serving

the bottom of the pyramid” concept during crisis where they did community service, PCRs for all employees, opened applications

(refer to ethical and social responsibility standpoint topic above) all hint at their concern for their employees with lower incomes.

Such acts promote their brand name giving them added advantages during trades or exportations and gaining them international

recognition.

Figure 9: Factors in the International Environment by Daft, Richard L., P.128.

Figure 8: Dimensions of Global Mindset by Daft, Richard L.,

P.115.

Impact of COVID-19 pandemic in the group operations

Negative impacts of Covid-19 has gone hand-in-hand with the opportunities gained through it in the case of Hayleys PLC. Below

is a list of the impacts, both positive and negative, posed by the pandemic for all 12 of their business sectors as a whole. These

were taken directly from the annual report of Hayleys PLC from the 2020/ 2021 issue. As denoted in the report, following the

outbreak of COVID-19, their immediate priority was ensuring the health and safety of their employees. Despite significant stress

on their performance, a Group-wide decision was made to try and minimize the impacts of the negatives through strategic

direction which will be focused on in the next section and to harness the opportunities (positives) listed below. (Hayleys PLC

Annual Report, 2020/ 2021, P. 56-69).

Table 3: Positives and Negatives of the pandemic on Group Operations

Risks Opportunities

Raw material shortages in coconut fibre and timber

Exchange rate volatility

Fluctuations in agricultural output and raw material prices

Labour shortages

Water scarcity

Implications of climate change

Cancellation of orders post-COVID19 (e.g. in medical

gloves)

Changing customer preferences

Exposure to fluctuations in yarn prices

Subdued demand from domestic market

Escalating cost of production

Fluctuations in tea and rubber prices

Plantation wage increase demands

Adverse weather conditions

Labour shortages

Policy instability

Slowdown in consumer spending

Import restrictions imposed by government

Border closures and travel restrictions

Safety of travel

Impact of social distancing measures on banquets and events

Import restrictions

Exposure to weather patterns

Slowdown in global trade

Volatility in freight rates

Volatile global oil prices

Slowdown in Construction sector

Liquidity crunch in construction industry

Intensifying competition

Deferment of all employee engagement and training activities

in the short-term

Freeze new recruitments

Emerging opportunities in growing media

Regional expansion of manufacturing footprint

Rising demand for synthetic latex-based gloves

Increased demand for medical gloves

New market opportunities in personal protective equipment

Growth opportunities in regional markets

Increasing focus on sustainability considerations

Growth opportunities in export markets

Reduction in global metal prices

Increasing customer prevalence towards healthy beverages

Buyers’ emphasis on sustainability considerations

Opportunities for regional expansion

Climate smart agriculture

Increased demand for laptops/smart phones due to virtual

learning

Increasing customer sophistication

Low penetration of consumer durables

Pent-up demand in the domestic market

Increasing focus on sustainable tourism

Global drive towards renewable energy

Overseas expansion opportunities

Opportunities in technologically advanced logistics

Regional growth

BPO: Entry into new markets

Winning employee trust thru retaining all employees and

maintaining full remuneration when other companies fired

staff

Facilitate technology to enable remote working and work-

from-home as far as possible which opened new technological

avenues

Merging job functions to optimise workforce

Cross-utilise employees across sectors wherever possible

meaning more over-time

Some of changes in strategic direction in response to COVID-19 pandemic highlighting planning,

decision making, innovation and adaptation to regain profitability at a time of a great crisis situation

Strategic decision making comes

with its fair share of risks,

uncertainty and ambiguity.

However, it is a manager’s job to

do so. After Hayleys’ Group-

wide discussion, they created a

risk and opportunity chart (also

known as the risk assessment

plan- Figure 10) for the annual

year which we have previously

discussed. The previous impacts

listed are a result of the

assessment. And based on their

observations, Hayleys planned

and carried-out their vision.

Following Figures 11 to 15 are

all elaborate decisions Hayleys

has made in their organization to

adapt to change and gain a

competitive advantage over their competitors through innovation.

This means that they have had to evolve from a more classical perspective style of management to an amalgamation of both

scientific and theory X & Y managements of the human resources perspective. Scientific management is a subfield of the classical

perspective that emphasizes scientifically determined changes in management practices as the solution to improving labor

productivity while the humanistic perspective emphasizes understanding human behavior, needs, and attitudes in the workplace.

Hayleys tries to work with a scientific approach while also taking a humanistic approach to issues.

Though the strategic responses are clearly mentioned below, I want to give one great example of strategic focus and direction

Hayleys took to increase profitability. E.g. When industries such as tourism and travel took a big hit due to the pandemic and

travel restrictions, Hayleys saw growth opportunities in hand protection. They put most of their resources into making

technological advances in their glove manufacturing company DPL to widen their portfolio. This is one of the prime examples

of their planning and operational excellence.

Figure 10: Example of their Risk Assessment

Figure 11

Figure 12

Figure 13

Figure 14

Figure 15

References

2019-2020. Hayleys PLC Annual Report: Our Vision, Mission, Values. P.4 & 5.

2020-2021. Hayleys PLC Annual Report: Vision, Mission, Values. P.8 & 9.

Fayol, H. (1949). General and Industrial Management (C. Storrs, Trans.). London: Sir Isaac Pitman & Sons. P. 20

& 21.

Daft, Richard L. (2016). Management. 12th Edition. Chapter 5: Managing Ethics and Social Responsibility. P. 150-

173.

Jayasekera, W. & De Zilva, R. (2021). Power and Energy: To be the leading renewable energy solutions provider in

Sri Lanka [Website]. https://www.hayleys.com/power-energy/.

2020-2021. Hayleys PLC Annual Report: Risks and Opportunities. P. 85-95.

2020-2021. Hayleys PLC Annual Report: Sector Review- Eco Solutions (Stakeholder value creation). P.102.

Rijamampianina, R. & Carmichael, T. (2005). A Framework for Effective Cross-Cultural Co-opetition between

Organizations [PDF]. P. 95.

Hayleys PLC Annual Report. (2020/ 2021). Risks and Opportunities & Impacts. P. 56-69

Daft, Richard L. (2016). Management. 12th Edition. Chapter 3: The Environment and Corporate Culture. P. 75-101.